“These derivative instruments will initially include stock index and currency futures and will serve to deepen liquidity in the Kenyan markets expanding the exchange’s product offering,” said a statement by the NSE.

The NSE received formal approval from Capital Markets Authority (CMA) in October last year, to operate a derivatives market.

Interest continues to grow

The bourse has since announced that interest in Kenya’s capital markets continues to grow with foreign investors taking up 40 per cent of the stock market.

Derivatives are financial instruments which derive their value from an underlying interest. They are controlled from a central financial exchange where traders exchange specified commodities at specified prices and time.

The NSE chief executive Geoffrey Odundo said the upcoming exchange traded derivatives will be allowed based on a variety of underlying financial instruments including currencies and equities.

Clearing members will compute obligations of all trading members, perform the actual settlement of funds and constantly manage the risks involved among all trading members.